Government promises quick decisions on savings measures

Ⓒ AFP/Archives – Martin BUREAU – | The Minister of Public Accounts, Gérald Darmanin, in the National Assembly on July 5, 2017

The government pledged Thursday to clarify within a fortnight the round of screw planned to contain the public deficit to 3% in 2017, and ensured that the timetable of its tax reforms would be stopped “before the end of the year”.

Who will be affected by budget cuts? How will the tax cuts promised by Emmanuel Macron be combined? Summoned by the opposition in particular to detail its budgetary program for the moment unclear, the government undertook to provide prompt answers.

“I proposed to the Prime Minister a number of savings” and he “will make arbitrations in the week,” announced the Minister of Public Accounts, Gerald Darmanin, recalling that Bercy had to find 4 to 5 billion euros In order to comply in 2017 with the European budgetary rules.

According to Gérald Darmanin, who will meet on Thursday afternoon with parliamentarians, local elected representatives and trade union representatives for “States General Accounts of the Nation”, 120 million euros of savings will be taxed on the perimeter of Bercy d ‘By the end of 2017.

For the rest, “nothing will be sanctuarized even if there are priorities”, said the spokesman of the government, Christophe Castaner, announcing “decreases of public expenditure in all the ministries”. “Within fifteen days, we will say where we are saving,” he warned.

Prime Minister Edouard Philippe announced on Tuesday, in his general policy speech, a decline in “ambitious” public expenditure and the postponement to 2019 of several key tax reforms to contain the government deficit at 3% of GDP, in 2017 as In 2018.

These announcements, made five days after an alarmist audit of the Court of Auditors, have raised fears in the opposition, but also among some economists, worried about the effect of this screw tightening coupled with this carry-over of Taxes could have on growth.

– “a number of unknowns” –

“Emmanuel Macron was not elected for three months, he was elected for five years (…) At no time in the campaign we said + We will reduce this tax in September 2017, another in January + “, Defended Christophe Castaner, refuting any” lack of transparency “.

“We will stop before the end of this year the whole mechanism” so that “the essential comes into force from 2018 and from 2019”, added the spokesman, assuring that the commitment taken by the government, Compulsory levies of 20 billion in five years, would be respected.

Faced with the deputies, the Prime Minister confirmed on Tuesday that the abolition of employee contributions would come into force in 2018, but indicated that the reform of the wealth tax (ISF) and the transformation of the CICE into a reduction in social contributions would intervene Than in 2019.

It also did not specify the date of entry into force of the flat tax on capital income and remained unclear on the abolition of the housing tax for 80% of households, Spread between 2018 and 2020, and presented as a key measure for the purchasing power of households.

“At this stage there are still a number of unknowns,” says Emmanuel Jessua, COE-Rexecode’s director of studies, criticizing the postponement of key tax reforms to 2019. “It was expected that there would be a positive tax shock in 2018, it may not be the case,” he said.

“What has been announced by the government concerning the sprawl over the five-year period of a certain number of tax cuts seems courageous,” on the contrary judged the governor of the Banque de France, François Villeroy de Galhau, Presenting its recommendations integrated into the institution’s annual report.

“If France does not reverse its long drift in public finances in the coming years, it will be exposed to a double negative shock: a competitiveness shock” and “a shock of sovereignty,” added the governor, Considering it “imperative” to reduce public spending.